How Pubs Can Choose the Best Business Electricity Supplier

09 May 2017

How Pubs Can Choose the Best Business Electricity Supplier

Electricity is essential in your pub for running big screen televisions, fridges, kitchen equipment, and, of course, the lights. It is, therefore, important you choose the best electricity supplier as this might save your pub considerable amounts of money each year. When you combine this with implementing energy saving measures, you will reduce the cost of electricity to a minimum.

The Difference Between Commercial and Domestic Energy Contracts

Commercial and domestic energy contracts differ in a number of ways. For a start, your pub has to pay a higher rate of VAT than domestic energy users – you pay 20 percent VAT while a domestic user pays five percent.

The other main difference is how commercial energy suppliers price electricity contracts. In the domestic market, suppliers buy electricity to cater for all their customers in advance – usually several months in advance. Commercial energy suppliers purchase energy on a client-by-client basis.

Therefore, the deals you get are usually for a fixed contract term – usually between one and three years although some contracts can be for as long as five. Once you agree a deal, your business electricity supplier will purchase enough electricity to cover you for the full duration of your contract.

This means the time of year you purchase electricity is important as prices can vary from month to month based on conditions in the wholesale market as well as other factors.

This leads us to our first tip: you should check the electricity rates available on the market on a regular basis, not just when your contract is up for renewal. This will give you an idea of the best time of year to buy electricity for your business.

Types of Electricity Rates

Many pubs in the UK and in other businesses are on fixed term contracts with a fixed rate. This means the price is locked for the duration of the contract making it easier to budget and reducing your risk of rising prices. The downside is you cannot choose to change your electricity supplier until the end of the contract.

The other main type of contract you might be on is a rollover contract. This is a type of contract that kicks in whenever a fixed term contract ends. Your business energy supplier will write to you in the months before your contract ends to give you the terms of your new deal – the rollover deal. Usually, the price you pay will go up. You can agree to this, terminate, or do nothing:

  • Agree – the rollover contract will come into force from the date the previous contract ends. This normally locks you into another fixed term.
  • Terminate – you can also write to the supplier notifying them of your intention to terminate. In this situation you would compare prices from other suppliers to get a better rate.
  • Do nothing – in this situation, your energy company will assume your acceptance of the rollover terms. This is the worst of the three options.

Which brings us to our second tip: the best option you have is to compare the market to ensure you always have the best electricity supplier for your needs.

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